TIOL-DDT 1665 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1665 </font><br>
03.08.2011 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Department very lenient on BCCI - Standing Committee Report to Parliament </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Standing Committee on Finance headed by former FM, Yashwant Sinha, in its latest report to Parliament on evasion of Income Tax, Service Tax and FEMA violations, has remarked, "The Committee are thus constrained to conclude that the Income Tax Department has been very lenient on BCCI, allowing them to enrich their coffers at the expense of the exchequer. The Committee would therefore like this matter to be thoroughly probed and an action taken report furnished to the Committee within one month of the presentation of this Report. In the meantime, the Committee desire that all the pending tax assessments in respect of BCCI should be finalized on the strength of the Department's decision to withdraw exemption originally granted to BCCI." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee further observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a matter of surprise that when the crass commercialization of cricket was visible to the entire world, the Income Tax Department chose to ignore it. When they finally woke up from their slumber and decided to withdraw the tax exemption, it was on a mere ‘technical' ground of promoting other sports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is thus quite evident that the Income Tax Department has been rather inconsistent in bringing BCCI into the taxability net. The inordinate delay and gross inaction in finalizing assessments cannot but reinforce the Committee's desire seeking a thorough probe into the whole gamut of this issue, bringing out clearly the culpability of the tax officials concerned with granting exemptions and finalizing assessments in this case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee gather that for the IPL tournament, the BCCI have filed returns to the Income tax Department showing ‘nil' income for the year 2008-09 and an income of Rs. 14.86 crore for the year 2009-10, whereas their gross revenue earned from IPL during the assessment year 2009-10, as furnished by the Department of Revenue, works out to an amount of Rs. 661.78 crore. The revenue figures for 2010-11 have not been made available to the Committee. On the other hand, the IPL franchisees have returned huge losses for the assessment years 2008-09 and 2009-10. Most of them have returned losses for the year 2010-11 as well. In this regard the Committee have been informed that the CBDT has constituted a committee comprising of the <em><strong>concerned</strong></em> Chief Commissioners of Income Tax to ensure that uniform view is taken by the assessing officers on different aspects of assessment of IPL revenues. The Committee would expect that the income tax assessments relating to BCCI-IPL as well as the franchisees and other entities connected with IPL for all the relevant assessment years are taken up on priority and finalized in a coordinated manner after taking necessary inputs from the investigating agencies as well. The Committee should be apprised of the assessments thus made and the quantum of taxes realized therefrom. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee find that the Central Board of Excise and Customs (CBEC) have realized an amount of Rs. 94.32 crore by way of service tax together with interest of Rs. 91.63 lakh from IPL during the period 2007 to 2010. Further, as the BCCI-IPL were liable to pay service tax on franchisee fees, Business Consultancy Services, sale of space for advertisement, game right etc. a total of 102 show cause notices (as on 1 February, 2011) demanding service tax of Rs. 160.28 crore have been issued to them, out of which only Rs. 5 crore has been paid. The Committee are not able to understand why such a paltry sum of Rs. 5 crore has been deposited against the demand of Rs. 160.28 crore in view of the fact that this service tax would have been realized by BCCI from the <em><strong>concerned</strong></em> agencies such as franchisees, vendors and media etc. The Committee desire that the adjudication of the service tax demands should be made expeditiously and they be apprised of the quantum of tax realized therefrom as well as the amount of interest and penalty levied thereupon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(From the 38 th Report of the Standing Committee on Finance of the 15th Lok Sabha)</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Overseas Units - 17.2 Cr. Sought</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Revenue
Department has sought Rs. 17.2 Crores in the Supplementary Demand for Grants
placed before Parliament. This is for meeting expenditure towards setting
up Income Tax Overseas Units in Cyprus, France, Germany, Japan, Netherland,
United Arab Emirates, United Kingdom, United States of America, Singapore
and Mauritius. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">India-Japan CEPA comes into force - Rules of Origin Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY'S</strong> DDT mentioned about the Customs Duty exemption notification for imports from Japan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exemption shall be available only if importer proves to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of the origin of Japan,<strong> in terms of rules as may be notified in this regard by Central Government</strong>. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has now notified the Rules. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_055.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 55/2011-Cus., (NT), Dated: August 1, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP – Export of Cotton – Cap removed </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> cap on export of cotton [ITC (HS) Code 5201 & 5203] has been removed. However, condition regarding registration of contracts with DGFT would continue to apply. A new procedure of registration is being separately notified for export of Cotton [ITC (HS) Code 5201 & 5203]. In respect of cotton waste including yarn waste and garneted stock [ITC (HS) Code 5202] there is no change even in the procedure to obtain registration. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not062.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 62/(RE-2010)/2009-2014, Dated: August 2, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prosecution of Directors - MCA Issues Master Circular </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CONSOLIDATING </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the earlier Circulars on prosecution of Directors, the Ministry of Corporate Affairs has issued a Master Circular. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has come to the notice of the Department that in spite of various rulings available on the question of “officers in default” who can be held liable for violations of a particular provision under the Companies Act, the ROCs are arraying all the directors of the company for the violations without differentiating between officer in default and or others. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry directs that “<em>There should be proper application of mind on the part of Registrar of Companies in deciding whether a person to be implicated is an ‘officer in default' by examining the Annual Return, Form 32(s) and DIN-3 database available in the Registry. The guidelines issued should be applied and wrongful prosecution should be avoided</em>”. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/mca_circular01.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MCA Master Circular No. 1/2011 , Dated: July 29 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IAS/IPS/IFS Officers may be taken back within 90 days if they wish to come back after resignation - AIS (DRB) Rules amended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government has amended the All India Services (Death-cum-Retirement Benefits) Rules. Now the Government can permit a member of service to withdraw his resignation in the public interest, subject to certain conditions. </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The resignation was tendered by the member of service for some compelling reasons which did not involve any reflection on his integrity, efficiency or conduct and the request for withdrawal of the resignation has been made as a result of a material change in the circumstances which originally compelled him/her to tender the resignation;
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The period of absence from duty between the date on which the resignation became effective and the date on which the member is allowed to resume duty as a result of permission to withdraw the resignation is not more than ninety days; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ No withdrawal of resignation, if he was associated with politics</font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/dopt.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DOPT Notification in F. No. 24012/10/2010-AIS (II), Dated: July 28 2011 </font></strong></a></p>
</div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Classic English in Delhi HC Judgement </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> judgement delivered on 1st August 2011 by Chief Justice Dipak Misra of the Delhi High Court, is a classic example of Classic English. See a sample below with the meanings of the words, phrases and doctrines. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the <font color="#663399"><strong><em>similitude</em></strong></font> of the principal controversy pertaining to the jurisdiction of the High Court of Delhi being involved in these writ petitions, they were heard <font color="#663399"><em><strong>analogously</strong></em></font> and as the said issue is the only question of reference, it is being adverted to and dealt with by a singular order. For the sake of convenience, we shall adumbrate the facts in W.P.(C) No.6570/2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Similitude - likeness; similarity </font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Analogously - In an analogous manner; in a manner which evokes analogy</em>. </font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Advert </em>- To turn attention. </font></strong></font></p>
<p align="justify"><em><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Singular – please note it is not single. </font></strong></font></em></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Adumbrate </em>- To give a sketchy outline of . </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before we proceed to analyze and appreciate the ratio decidendi in New India Assurance Company Limited (supra), it is seemly to exposit the necessitous primary facts averred in the present writ petition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><em>ratio decidendi - legal rule derived from, and consistent with, those parts of legal reasoning within a judgement on which the outcome of the case depends. </em></font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Seemly - proper or fitting </font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Exposit - set forth </em></font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Necessitous</em> - Needy </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. Regard being had to the aforesaid historical backdrop, we shall <em><strong><font color="#663399">presently</font></strong></em> proceed to deal with the Full Bench decision in New India Assurance Company Limited (supra) to perceive how it has dealt with the concept of jurisdiction in the context of the conception of cause of action and the appreciation of the ratio of various citations by the Full Bench referred to by it. </font></p>
<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Presently - as generally misunderstood and misused in India and America, presently does not mean ‘at present', it means ‘in the immediate future' as correctly used by the judge. </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. On a nuanced scrutiny of the decision of the Full Bench, it is clear as day that it has expressed the view which can be culled out in seriatim as follows: </font></p>
<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">nuance - to give subtle differences </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. Presently, we shall proceed to advert to the authorities that have been referred to and relied upon by the Full Bench for the simon pure reason that understanding of the principles exposited therein would enable us to appreciate the enunciation of the law by the Full Bench and also refer to certain authorities that have been cited before us. </font></p>
<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">simon pure - Genuinely and thoroughly pure./Superficially or hypocritically virtuous. </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">30. From the aforesaid pronouncements, the concept of <em><strong><font color="#663399">forum conveniens</font></strong></em> gains<strong><em><font color="#663399"> signification</font></em></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399"><strong>forum conveniens: “</strong></font></em><font color="#663399"><strong>The court in which an action is most appropriately brought, considering the best interests and convenience of the parties and witnesses</strong><em><strong>.” </strong></em></font></font></p>
<p align="justify"><font color="#663399"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Signification: meaning/sense/significance </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">32. The principle of forum conveniens in its ambit and sweep <font color="#663399"><strong><em>encapsulates</em></strong></font> the concept that a cause of action arising within the jurisdiction of the Court would not itself constitute to be the determining factor compelling the Court to entertain the matter. </font></p>
<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Encapsulate: to sum up in a short or concise form; condense; abridge </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this interesting judgement today. Please see Breaking News </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Wednesday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Charter of Aircrafts - Board Instructions Challenged – No Coercive steps before adjudication - validity of circular is kept open: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FACTUAL</strong> matrix in each case has to be examined. High Court cannot examine and decide the issue in a vacuum. Adjudication should take place first and till the adjudication is made, no coercive steps shall be taken against the members of the petitioner-association. In case members of the petitioner-association are aggrieved by any kind of adjudication, they can challenge the same before the appropriate forum in accordance with law. The issue pertaining to the validity of the circular is kept open. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when assessee enters into restrictive covenant not to use own trademark but allowed to manufacture and sell products, payment received for loss of income source is to be treated as revenue receipt - NO, rules Madras HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a company carrying on business in manufacturing mosquito repellents and selling it in the name and style of 'Banish Mats', a patent owned by its sister concern. It had an agreement with M/s Bayer India Limited for manufacture and sale of insecticides, including household insecticides at an agreed price. Upto the year 1995-96, the assessee was selling its products manufactured under its trademark, apart from the agreement with Bayer India Limited to manufacture and sell mats under contract basis.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign Trade policy </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">DEPB Rates - Reduction in DEPB rates - Only prospective - beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively- promissory estoppel is principally evolved on equity and to avoid injustice: HC</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WHEN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> a Government makes a promise intending or intended that it would be acted upon by the promisee and the promisee acts by relying upon the promise and alters his position, the Government should be held to be bound by the promise and the promise would be enforceable notwithstanding that there was no consideration and no formal contract was executed. However, the said doctrine is based on equity and when over-riding equity in form of “public interest” requires that the plea of promissory estoppel should not be applied, the Courts would not issue a writ. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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